View more on these topics

George Osborne orders independent inquiry into Co-op Bank

Chancellor George Osborne has ordered an independent investigation into events at the Co-operative Bank as regulators consider launching enforcement action.

Osborne is using his powers under the Financial Services Act 2012 to order an independent investigation into the bank.

The investigation has been jointly agreed with the two regulators – the Prudential Regulation Authority and the FCA – who agree there is a public interest in a statutory investigation.

It will be led by an independent person appointed by the regulators, yet to be decided, with the approval of the Treasury.

Separately, the FCA and PRA have today announced they are both considering whether they should also launch formal enforcement investigations.

The independent investigation will not start until it is clear it will not prejudice any actions the relevant authorities may take, including the potential FCA and PRA enforcement investigations.

The independent inquiry will take into account the FCA and PRA enforcement investigations and be determined in consultation with the independent person appointed to lead it.

It will cover the actions of regulators and Government as well as the Co-op Bank including prudential issues, governance – including the appointment of senior staff – and acquisitions.

The investigation will go back to at least 2008.

The Co-op Bank discovered a £1.5bn black hole in June and it has been forced into a rescue plan. It also pulled out of its bid to buy 632 Lloyds Banking Group branches.

This week, it has come under fire for appointing Reverend Paul Flowers as chairman in March 2010 after he was arrested this morning on suspicion of supplying drugs.

An FCA spokesman says: “The FCA fully agrees that the investigation should be led by an independent person, and looks forward to supporting them in their work. The FCA will make its full resources available to support the investigation.

“The timing of the investigation must not prejudice any other criminal or regulatory proceedings. The FCA is already undertaking work to establish whether it should commence a formal enforcement investigation and expects to reach a conclusion shortly.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. How can the person appointed to carry out the enquiry be ‘independent’ when they are appointed by the people subject to the enquiry, i.e. the regulators??? The only way this can work is if someone from the judiciary leads it.

  2. In the words of Jim Royle, independent my ar$e!

    An independent person will be appointed by the regulator and the regulator will make their resources available to the indepenedent person. The regulator will work closeley with the independent person.

    How is that independent? There will be a lot of expensive cosy lunches at the taxpayers expense and of course it will all be the Labour Party’s fault.

    I don’t believe that the Co-op ever really wanted to take over the Lloyds branches it is not a secret that they were being forced by the Treasury. I also believe that they were forced to take over the failing Britannia even though that had some gaping black holes in its accounts.

  3. Was it not Mr Sants who approved Mr Flower under the FSA.

  4. the elephant in the room 22nd November 2013 at 6:01 pm

    Perhaps George is after Paul Flower’s dealer’s number?

    Purely to further the enquiry of course!

  5. To Grey Area ~ Quite so, but not the judiciary. What’s needed is an Independent Regulatory Oversight Committee to investigate and hold to account those responsible for what’s turned out to be yet another motorway pile-up. What will an investigation into the Co-op and its board of directors reveal that’s not already known? It goes without saying, let alone any expenditure of money and resources that they acted irresponsibly/ recklessly/ incompetently and maybe even corruptly. How can they possibly not have realised that Flower was a patently unsuitable candidate for the job? Yet they decided to appoint him anyway and the FSA approved it.

    The real villains of this piece are the regulators who should never have approved his appointment but, for reasons that need to be identified and made public, did. Hector Sants should be called before the Committee and be required to explain how and why he allowed this to happen on his watch and to name exactly who signed it off. Should he try his old trick of trying to shelter those responsible by offering an obfuscatory response such as it having been “a collective failure”, this should be treated as contempt and punished accordingly.

    It’s the same old problems ~ lack of accountability and statutory immunity from prosecution. The regulator is forever holding others to account (frequently the wrong parties, of which there are so many examples) yet is itself never held to account. The nearest we ever got to that was the token sacrifice of Clive Briault for his failure to prevent the meltdown of Northern Rock and look what he got ~ a golden parachute worth £612,000 with OPM. It stinks.

  6. Michael Mason-Mahon 24th November 2013 at 6:53 am

    Is the British Government and the Regulators treating Mr. Flowers differently then they treated Mr. Flint the Chairman of Mr. Gulliver and the Board of Directors of HSBC Holdings Plc??????

    The wide-ranging investigation in the Co-op Bank announced by Mr. Osborne followed calls from David Cameron for an inquiry into the decision to appoint Mr. Flowers as chairman at the bank.

    Yes there is a great need to investigate the behaviour of Mr. Flowers but Mr. Flowers is just one person.

    Did the Co-op Bank launder over 880 million in drug cartel’s money or allowed Iran to pass $19.5 billion through the Bank? No.

    The Senate investigation concluded that HSBC provided a, “gateway for terrorists to gain access to U.S. dollars and the U.S. financial system.” Yet when HSBC Group did this, did Mr. Osborne and Mr. Cameron start asking for an investigation into the Board of Directors of HSBC???

    No way and why have they not?? How many Directors of HSBC Holdings Plc have jobs with this Government?????

    Has Mr. Flowers just got friends in low place instead of high place????

    Will Mr. Cameron & Mr. Osborne the FCA & PRA act with courageous integrity and show there is no bias and announce an investigation into the criminal and illegal behaviour of the HSBC Group??????

    The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) – who agree there is a public interest in a statutory investigation,”into Co-op a Treasury spokesman said.

    Why has the PRA & the FCA refused to announced “there is a public interest in a statutory investigation” into the behaviour of the Board of Directors of HSBC Holdings Plc, for the HSBC Group’s illegal and criminal behaviour for over ten years???????

    The chancellor used the Financial Services Act 2012 to order an independent investigation into “events at the Co-op Bank and the circumstances surrounding them”.

    This will date from 2008 and include the conduct and appointment of directors.

    Why has the chancellor not used the Financial Services Act 2012 to order an independent investigation into “events at the HSBC Group and the circumstances surrounding them committing illegal and criminal behaviour for over ten years”?

    Separately, the FCA and PRA are considering whether they should launch formal enforcement investigations.

    Andrew Tyrie, chairman of the Treasury Select Committee, said: “A comprehensive independent inquiry is much needed. The Co-op bank’s problems appear to have developed over many years.

    Prime Minister Mr. Cameron & Chancellor Mr. Osborne the FCA & PRA Andrew Tyrie, chairman of the Treasury Select Committee, why have these people and regulators never called for the same level of investigation into Mr. Flint the Chairman of Mr. Gulliver and the Board of Directors and previous Board of Directors of HSBC Holdings Plc???????????

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com